To achieve that target, the company will use gas as a transition feedstock at its South African operations. It will make no future investments in coal reserves beyond the 2043 lifespan of its current coal reserves. In addition, Sasol will procure 1,200 megawatts (MW) of renewal energy, it aims to lead the charge on the hydrogen economy and has unveiled a new unit dedicated to green initiatives including sustainable aviation fuel (SAF). Furthermore, Sasol has set up a Just Transition Office.
Sasol CEO and president Fleetwood Grobler, flanked by some members of his executive team – Paul Victor, Priscillah Mabelane, Marius Brand and Brad Griffith – gave an update on Wednesday 22 September about the company’s plans to decarbonise its energy and carbon-intensive business.
Its environmental targets, portfolio rebalancing, and partnerships aligned to its focus on a self-funded path towards net zero emissions by 2050 were some of the themes of this market presentation.
Victor is the incumbent CFO; Mabelane, the erstwhile CEO of BP Southern Africa, is the executive vice-president for energy; Brand is the executive vice-president for Sasol 2.0 and will head the business unit called ecoFT; and the US-based Griffith is the executive vice-president for chemicals.
The Secunda and Sasolburg sites are where most of the decarbonisation work will unfold Sasol CFO Paul Victor tells The Africa Report.
However, Natref, the inland refinery co-owned by Sasol and Total, was noticeably absent from the presentation prompting questions from analysts about its future.
Cold shoulder to coal
“We have coal reserves until 2043. We have no intension of changing that pathway. We produce around 40 million tonnes of coal – … [and] 3 million tonnes for the export coal division. The useful life of the export coal division is ending just after 2030. We are not going to extend the reserves. That mine will cease to operate by the end of 2030,” says Victor.
“When it comes to the other investments that feed Sasolburg and Secunda, their useful lives are 2043. We will start to ramp down our coal production from the 40 million tonnes we produce per year to about 30 million tonnes by 2030, and probably go lower and lower towards 2043 until all the coal reserves run out. That is the trajectory,” Victor adds.
In the immediate term until 2030, the labour in the export coal division will be unaffected. But when the export coal division closes in 2030, “that will mean a smaller workforce in that timeframe,” Victor says.
In Secunda, “as we ramp coal down, we will ramp more gas up as a feedstock. Those feedstocks will … come from Mozambique, from our PSA [Production Sharing Agreement] development, and the LNG [liquefied natural gas] developments that we are currently busy with,” says the CFO.
“We will probably need to refit some of the equipment … and that will be occurring over the next five to six years to make sure the conversion efficiency of input to output does deliver the carbon improvement. Those will be the two immediate steps: more gas and better efficiency from our equipment,” Victor adds.
In the next four to five years, Sasol wants to introduce 1,200MW of renewables. That will mean fewer boilers in operations that generate steam and electricity from coal.
“The combination of those three things will give us the 30% by 2030,” he says.
The Just Transition Office will be the responsibility of Charlotte Mokoena, the executive vice-president for human resources and corporate affairs.
“That office is important … I am a believer [that] transparency and accountability go together. That office will be … [a] hub to ensure that what goes out and what comes in is transparent, and progress is clearly articulated,” Victor says.
Grobler explains how “2017 was the year when Sasol had a very good run rate of our facilities in South Africa. Because of high output and the associated high emission footprint, we used that as the base year.”
Gas in the mix
Admittedly, South Africa is among the highest emitters of GHG in the world on a per capita basis because it is a coal-based economy.
“We do not underestimate the challenge ahead of us to transform our operations,” Mabelane conceded. “We acknowledge that Sasol’s vision for our South Africa operations is considered impossible by many of our stakeholders.”
The magnitude of the challenge has not deterred Sasol from proceeding with its plans despite the palpable scepticism.
- Sasol and the Central Energy Fund (CEF) have signed a memorandum of understanding to collaborate on speeding up the development of gas solutions in South Africa. The company has also concluded a memorandum of co-operation with the Industrial Development Corporation jointly to shape an enabling environment to advance South Africa’s green hydrogen economy.
Said Mabelane: “We are looking at two sources of LNG importation: Matola and Richards Bay. In terms of Matola, we are advanced. In terms of Richards Bay, it is going to take a while. We are working jointly with the CEF, as well as government, to see whether we can accelerate the developments. We need the two options to ensure security of supply and flexibility.”
On the hydrogen economy in Southern Africa, Sasol has identified two pillars, according to Mabelane: stimulating the local market and working with commercial customers in, among others, mining, transport, and steel.
On the former, Sasol has been working closely with government and participated on forums set up by government to ensure the development of a hydrogen strategy. On the latter, Sasol’s aim is to run pilot tests to drive incubation and demand. “We are also working with a number of OEMs [original equipment manufacturers] to ensure that we can get the right technologies,” she says.
“We are also participating in the H2 Global Auction and aim to be the first producer of SAF in the country by 2025 out of Secunda in partnership with Linde, Enertrag and Navartis. We are collaborating to develop hydrogen export post-2030,” Mabelane adds.
Brand explained that “currently, we don’t produce any SAF. We do produce synthetic fuels – synthetic aviation fuels that we supply to a South African airport based in Johannesburg. The cost to produce SAF, currently, is higher than fossil jet fuel, but we see that cost curve coming down significantly; and there is the opportunity that we will pursue.”
Refining the refinery
But “with regard to Natref, a decision has not yet been made,” according to Mabelane, who clarifies that, “what we’ve done, though, [is that] we have modelled and assessed the impact of CF2.”
“We do know that without any compensation or remuneration framework, it is not viable to upgrade Natref. Having said that, we are running multiple scenarios to see what options we have to convert Natref into a sustainable refinery depending on demand going forward. We are in discussions with our partners, Total,” she said.
Sasol’s trump card
Grobler believes that Sasol’s Fischer–Tropsch (FT) technology, which is the foundation of the company’s Southern Africa value chain, means the company is on a solid footing to decarbonise and raise production of green fuels and chemicals.
Although several start-ups have entered the FT space, Grobler is unfazed. Instead, he points out that Sasol has had 70-year head start to work with the technology.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options